KIIFB approaches Kerala HC seeking to quash ED notice in masala bond issue

The Kerala Infrastructure Investment Fund Board (KIIFB) has approached the Kerala High Court seeking to quash a notice issued against it by the Directorate of Enforcement (ED) in connection with the usage of funds generated through masala bonds for infrastructure development in the State.

Stating that the ED often issued such notices during election time, the KIIFB contended that there are no curbs on spending the funds for purchasing land for infrastructure development and that everything is being done in adherence with Reserve Bank of India (RBI) norms.

ED opposes plea

The ED opposed the plea of the KIIFB, stating that it was not maintainable, since it had only issued a notice seeking explanation on the issue. It contended that the KIIFB had to approach the appropriate forum under the Foreign Exchange Management Act (FEMA).

After hearing the two sides, the court reserved its order on the maintainability of the plea. The matter is expected to be taken up for hearing on December 16.

The development comes within a week of Chief Minister Pinarayi Vijayan terming the ED notice to the State government and the KIIFB on masala bonds a ridiculous move made with political motive on the eve of the local body elections.